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UNCTAD XII to consider how poor countries can take advantage
of high prices
Accra, April 3, Ghanadot/GNA - The past
five years have been, on one level, the best in the past
quarter century for commodity-exporting developing
countries, as prices for these basic goods have climbed
substantially.
A statement issued by UNCTAD received in Accra on Thursday
said however, rising commodity prices were a double-edge
sword.
“While oil- and mineral-exporting countries have experienced
large gains, many low-income developing countries dependent
on exports of tropical agricultural products, especially in
sub-Sahara Africa, have seen the prices of their exports
outpaced by those of their imports (fuels and food), and
thus are experiencing significant deterioration of their
terms of trade,” UNCTAD said.
It said the current hike in world prices of nearly all major
food and feed commodities was having a ripple effect,
contributing to food price inflation and to greater food
insecurity, especially in poor countries. In recent months,
food riots have broken out in several countries.
The statement said a major subject of discussion at UNCTAD
XII in Accra would be the role that can be played in
economic growth by recent record prices for such goods as
oil, minerals, metals, and basic agricultural products,
things that developing countries can and do offer to world
markets.
The vast majority of such nations – more than 90 – are
dependent on such commodity exports.
The statement said a 23 April roundtable debate at UNCTAD
XII on: "The Changing Face of Commodities in the 21st
Century," along with other discussions during 20-25 April
conference, would consider the major question of how far the
commodities boom can take developing countries on the path
of rising living standards and reduced poverty.
“Although commodity prices are notoriously cyclical, with
booms historically being followed by busts, there is a
possibility that this time demand will be sustained as
growth in emerging economies such as China and India
continues on an expected upward course.”
However, there is concern that the benefits of the recent
economic good times are not being shared equitably by all.
“For example, despite the best growth and export situation
for developing nations in the past 25 years, it is becoming
clear that many countries, especially in sub-Saharan Africa,
will not be able to reach the United Nations Millennium
Development Goal of halving extreme poverty by 2015.
“If expanding global income in the current very positive
situation is not reaching many of the world's poor, what can
be done?”
UNCTAD said there was also concern that the bulk of profits
from higher commodity prices did not necessarily end up with
governments or citizens in the developing countries that
supplied the exports.
“For example, many oil- and mineral-exporting countries in
Africa have seen most of the windfall gains from higher
prices drained by increased profit remittances by
transnational corporations involved the exploitation of
natural resources.”
It said research also showed that higher profits from
agricultural exports were not filtering down in many cases
to the developing country farmers who grow the crops.
“The bulk of the profits accumulates at the higher end of
the journey from the farm to the supermarket shelf. Most
money is earned at the level where goods are processed in
appealing ways, attractively packaged, branded, and
advertised.
“Depending on the type of crop, the share of the profits
retained by the smallholder farmers who labour to grow the
produce has in many cases fallen sharply even as prices have
climbed.”
UNCTAD said its economists and others elsewhere were
advocating that developing countries took advantage of
windfall income gains from the commodities boom to diversify
their economies into manufacturing and higher-level service
operations as a way of spreading employment and reducing
vulnerability to future commodity price declines.
But few such nations have so far managed such a transition
due to internal constraints such as institutional, policy,
infrastructural and human capital deficits, and external
factors such as trade barriers in the international trading
system – market access and entry conditions, lack of
regulation of anti-competitive practices in international
supply/value chains, and inability to comply with
ever-changing trade standards. Thus most continue to rely
heavily on primary commodity exports.
“UNCTAD XII will have to address all of these issues and
provide an opportunity for the international community to
agree on appropriate policy responses designed to harness
development gains from the current boom in commodity prices
and to address long-standing commodity trade and development
problems.”
GNA
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